Free interactive tools are available through CashCourse to help you with financial literacy throughout college and beyond. Below is information and tips about how to pay for your higher education.

Where Can I Find Money for School?

1. Free Application for Federal Student Aid (FAFSA)

The FAFSA is a free application that determines what federal aid you will be eligible to receive. This includes federal and state grants, federal work study, and student loans. Even if you don't qualify for grants or work study, you could still be eligible for some type of student loan.

Apply for federal aid online at www.fafsa.gov. NEVER use www.fafsa.com. This site offers the same service as www.fafsa.gov, but you will be charged to file the FAFSA.

You must file the FAFSA every year. It can be filed as early as January 1st every year for the following fall semester.

2. Private Aid

There are scholarships and grants beyond what PSU awards. Research other funding that you may be eligible for by searching different sites online. Be sure to use caution when searching for free money online. If a fee is required to apply for a scholarship, it is a good indication that it is not legitimate. You can also search within your community. Different businesses, churches, and employers may offer scholarships.

Student employment is another way to help meet your remaining expenses. If you meet all of your expenses with free money and earnings from employment you can avoid borrowing student loans. Many student employment positions on-campus are between 8:00-4:30 Monday-Friday and will work around your class schedule. Some on-campus jobs even allow you to work on homework or study while at work!!

Students must demonstrate financial need to be eligible for a Perkins and/or Nursing Loan.

The interest rate is fixed at 5% and there is a nine month grace period after the student graduates or drops below half-time enrollment, during which no interest will accrue and no payments are required.

Schools receive limited funding for this program. Therefore, there are eligible students that do not receive Perkins Loan because the school has exhausted their funds. If you are eligible for Perkins Loan, the earlier you file your FAFSA the better your chance of being awarded the funds.

Subsidized Stafford

Students must demonstrate financial need to be eligible for a Subsidized Stafford Loan.

The government pays the interest while the student is enrolled at least half-time and during a six month grace period after graduation or dropping below half-time.

Currently the interest rate for repayment is 4.66%. These rates can change annually but the new rate will only effect loans that are borrowed after the change. You lock in your interest rate at the time you receive your loan.

Unsubsidized Stafford

Students do not have to demonstrate financial need to be eligible for an Unsubsidized Stafford Loan.

The government does not pay the interest while the student is enrolled or during the six month grace period before repayment. Interest will begin accruing on this loan from the time of disbursement.

Currently the interest rate is 4.66%. These rates can change annually but will only effect loans borrowed after the rate change. You lock in your interest rate at the time you receive your loan.

Parent PLUS

Students do not have to demonstrate financial need to be eligible for a Parent PLUS Loan.

A parent of a dependent student applies for the PLUS Loan, not the student. This means that the parent is the one responsible for repaying the loan. Repayment begins 60 days after the loan is fully disbursed. For a Parent PLUS Loan that is for the fall and spring semesters, repayment would begin 60 days after the spring amount is disbursed.

Although repayment begins while the student is still in school, the parent can request a deferment to postpone their payments while the student is enrolled at least half-time.

Currently the interest rate is 7.21%. These rates can change annually but will only effect loans borrowed after the rate change. You lock in your interest rate at the time you receive your loan.

Unlike student loans, Parent PLUS Loans can be denied based on adverse credit. If a parent is denied for a PLUS Loan it is likely that the student would have additional eligibility for loans. A student will not be eligible for additional loans just because the parent chooses not to apply for a Parent PLUS Loan.

Alternative/Private

Students do not have to demonstrate financial need to be eligible for an Alternative or Private Loan.

These loans are through private entities, not the Department of Education, therefore interest rates, fees and repayment terms will vary.

Alternative Loans must be applied for separately from federal aid and are based on the student's credit. The lender will perform a credit check to determine if the student is eligible.

Many college students find they are not eligible unless they have a co-signer. The co-signer is responsible for repaying the loan if the student fails to do so. Students sometimes find it difficult to find a person willing to co-sign and take on that financial responsibility.

There is a detailed comparison chart for all of the student loans located on the Office of Student Financial Assistance website under Summary of Loans Programs.

2. Subsidized/Unsubsidized Stafford Loan Limits

There are laws that limit how much a student is allowed to have in Stafford Loans for an academic year. The amounts are based on grade level.

Annual Limit

Grade Level

Dependent Maximum

Independent Maximum

Freshman

$5,500

$9,500

Sophomore

$6,500

$10,500

Junior

$7,500

$12,500

Senior

$7,500

$12,500

There are also laws that limit how much a student can borrow while working on a degree. It doesn't happen often, but there are times that a student will exhaust their loan eligibility before finishing their degree. This generally only happens when a student takes longer than the typical amount of time required to complete their degree.

3. Advantages of Stafford Loans Vs. Private Loans

Stafford Loans are federal aid so the government is able to keep the interest rates very low and affordable compared to private lenders.

There are many repayment options for Stafford Loans. When repayment begins the borrower will be placed on the standard repayment plan. If the payments are not manageable you have other options.

Student loan payments should not exceed 8-10% of your gross monthly income. Think about what your expected earnings will be when you graduate and determine if you will be able to afford your payments.

Jump$tart Reality Check lets you answer questions about how you want to live your life after graduation. Using the information you put in, it will tell you how much you need to make in order to maintain that lifestyle.

The following chart shows the annual income recommended in order to afford repayment for different loan debt ranges:

Annual Income

Range of Maximum Affordable Student Loan Debt

$25,000

$13,616-$16,958

$30,000

$16,306-$20,383

$35,000

$18,997-$23,807

$40,000

$21,769-$27,150

$45,000

$24,459-$30,574

$50,000

$27,150-$33,998

$75,000

$40,766-$50,957

$100,000

$54,381-$67,915

$125,000

$67,957-$84,900

$150,000

$81,487-$101,887

$200,000

$108,767-$135,827

The average loan debt of a PSU undergraduate student set to graduate this year is $21,408. For a student with this amount of debt to be able to afford their payments it is recommended they earn $35,000 a year.

A dependent student that takes out the maximum loan amount for four years would borrow $27,000. Considering that some of that loan would be unsubsidized we can assume that the loan debt at graduation would fall into the $27,150-$33,998 loan debt range. In order to be able to afford repayment for that loan amount it is recommended that the annual income is at least $50,000.

This is why it is so important to consider your plans after college before deciding to borrow student loans. The majority of students do not start out earning $50,000 per year right out of college.

Paying just $20 extra per month on a student loan of $20,000 would save you $907 in interest and reduce the number of payments from 120 to 107.

If you must take out a student loan, only borrow what is needed. Try not to take the maximum offered if you don't need that much.

What Every Borrower Should Know

1. Consequences of Loan Default

Student loan debt doesn't go away if you avoid making your payments. There are serious consequences you could face, such as:

Your federal and state income tax refunds can be withheld.

Your wages can be garnished.

You would be responsible for any late fees and collection fees.

Legal action could potentially be taken.

Student loans, like other lines of credit, effect your credit report. Being in default could prevent you from obtaining other types of consumer credit, such as a home loan.

2. Repayment Options

Lenders and servicers have financial incentives to keep you in good standing rather than let you go into default on your student loans. Don't avoid the issue. At the first sign of problems contact your lender or servicer to let them know you're having trouble making your payments and ask about your options.

Some options include the following:

Deferment: A temporary suspension of loan payments for specific situations. A common reason for a deferment is returning to school. If you return to school at least half-time, you may qualify for a suspension of payment.

Forbearance: A temporary postponement or reduction of payments when you are experiencing financial difficulty.

Flexible Repayment Plans: There are a variety of repayment plans designed to hopefully make repayment a possibility for everyone. Some options include:

Income-Sensitive Repayment

Income-Contingent Repayment

Extended Repayment

Income-Based Repayment

3. Know Your Debt

The National Student Loan Data System (NSLDS) is a tool that you can use to determine how much you owe, who to repay, and who to contact with questions or concerns. This website will show you all of the federal student loans you have borrowed. It will give you the original balance as well as the current balance, if interest has accrued.

Beginning with the 2010-2011 academic year at PSU, all student loans are originated and disbursed through the Department of Education. However, a servicer is assigned to each loan. This means that when you begin repayment you may be making payments to an entity other than your inital lender.

An issue you may potentially run into is having several different servicers for your multiple loans. The NSLDS website will tell you who the servicer is for each loan and the contact information for that servicer.